The foreign exchange market, also known as Forex, was originally birthed in the late 1800s as a means of allowing countries to buy one anther's currencies for the purposes of transacting business on an international scale. The practice was confined to government institutions and banks until after World War II when it became more common among private investment companies and individuals. Yet it wasn't until the 1970s that it really took off.
When the 1940s Bretton Woods system was dismantled in 1971 it opened up the current free-floating system of exchange rates. That forever changed Forex and made it a vehicle of speculators around the world.
Heading into the 1980s it was dominated by large investment banks with a lot of money to risk. One of the hottest currencies at that time was the British sterling pound. Traded against the US dollar, there was big money to be made in that market.
Although there were independent traders back then most of the big names worked for a large bank. Trading back then meant going to your bank office and managing several terminals with one hand, a phone with the other, and listening to broadcast information over several speakers -- all same time. It was a high pressure game of poker in which groups of bank traders would work together to beat the system before other traders around the world knew what was going on.
For individual traders the pressure was even greater because they lacked the resources of the big banks. Independents were constantly monitoring the news, carried electronic "pagers" with them wherever they went, and always had to have access to a telephone. When trades needed to be made the individual would have to contact his broker. If he was behind by just a couple of minutes the difference could be tens of thousands of dollars.
Today, though FX trading can still be rather stressful, technology has taken most of the high stress factors of the 1980s out of the equation. The advent of the Internet and cheap personal computers now makes it possible to make a decent living from your living room. With today's software you can keep up-to-date on all the latest news and trends, use automated trading tools, instantly be in contact with others you're working with, and so on.
The real-time advantages of today's technology have made it so that you don't even have to be an experienced financial pro to do it. You can trade part-time as a hobby or just to earn some extra money.
If you'd like to try your hand at trading you need to get started with the fundamentals of Forex (Foreign currency trading market) before you invest any real money.